What to Know in Washington: Trump, in U.K., Slams London Mayor

President Donald Trump took aim at London Mayor Sadiq Khan just minutes ahead of arriving at the U.K. for an official visit this morning, calling him a “stone cold loser who should focus on crime in London, not me.”

Trump also said that Khan had been foolishly nasty to him as “by far the most important ally” of the U.K. In a second tweet, Trump went on to compare Khan to New York’s Mayor Bill de Blasio, who he called incompetent.

Trump had earlier slammed Khan before boarding Air Force One bound for the U.K. and ruled out a meeting with the mayor because he didn’t think much of him.
In characteristic style, the president had fired salvos at his hosts even before leaving Washington.

On successive days, Trump led British headlines with his views on the country’s political crises. Saturday saw his observation to the Sun newspaper that former Foreign Secretary Boris Johnson would make an “excellent” prime minister. The next day the Sunday Times reported his advice to Britain that Brexit Party leader Nigel Farage be appointed to negotiate Britain’s departure from the European Union.

But Britain is now accustomed to Trump’s approach to diplomacy. The calculations that the country’s Conservatives are making about who should succeed Theresa May are complicated, and unlikely to be much swayed by a presidential endorsement. And neither May nor any of her successors are likely to let Farage, a man who could pose an existential threat to their party, anywhere near a position of influence. As it gets underway, Robert Hutton and Margaret Talev preview Trump’s trip.
Follow updates throughout the day with Bloomberg News here.

Photographer: Luke MacGregor/Bloomberg
Trump salutes after disembarking from Air Force One on arrival at London Stansted Airport in Stansted, U.K., on Monday.

Trump’s Trade Wars

One common criticism of Trump’s trade wars is the confusion on strategy. Just days ago he threatened Mexico with tariffs unless it blocked illegal border crossings while submitting legislation to Congress needed to ratify an updated NAFTA guaranteeing free trade with Canada and Mexico.

So spare a thought for Chinese officials trying to read Trump as the showdown intensifies between the world’s two largest economies. In meetings with officials, investors and academics in Beijing, a theme emerges: Once confident it could deal with Trump, China is realizing in the thickening fog of his trade war that this may be a prolonged conflict.

If U.S. officials meet their Chinese counterparts at gatherings of Group of 20 finance and trade ministers in Japan this week, they may still try to secure a summit between Trump and President Xi Jinping in Osaka at the end of this month and possibly resume negotiations. To get there, they’ll need to address four issues perplexing Beijing. Shawn Donnan details those issues.

Mexico Talks: Trump said he’s “really okay” with imposing tariffs on Mexican exports to the U.S. should talks fail this week over illegal migration across the southern border. The Mexican government is sending a delegation to Washington on Wednesday, the president said, to discuss migration and Trump’s threat to impose an escalating tariff on Mexico’s U.S. exports unless the country takes unspecified steps to stop a surge of people crossing the border.

“Everyone’s coming through Mexico, including drugs, including human trafficking,” Trump told reporters as he departed the White House for the U.K. on Sunday. “We’re going to stop it or we’re not going to do business, and that’s going to be it. Very simple.”

“We’ll see what can be done” in the talks, he added. “But if it’s not done, you know what we’re going to be doing, and I’m really okay with that.” Josh Wingrove and Ben Brody have the latest on the talks.

What to Know About USMCA: Bloomberg Government legislative analyst Sarah Babbage reviews the U.S.-Mexico-Canada Agreement’s provisions, its projected economic effects, the timeline for its consideration in Congress, and the tariffs and lawmaker objections that could derail its implementation. Read the full analysis here.

On Lawmakers’ Radars

Disaster Aid: Lawmakers return to Washington today, with the House set to vote on a $19.2 billion disaster aid measure that the Senate passed before leaving Washington in May. Trump told lawmakers late last month that he planned to sign this measure into law, dropping an earlier demand that the measure include additional funds for humanitarian needs at the border.

House Democrats tried three times over the week-long recess to pass the measure by unanimous consent during pro forma sessions, only to be blocked by Republicans. Passage today is all but guaranteed.

Still, the vote will reveal a divide among Republicans. Some support the measure, though it spends billions of dollars with no offsetting spending cuts. Some will oppose the bill, despite frequent GOP attempts to blame Democrats for the delay in aiding communities affected by natural disasters. For a complete look at the measure, read the BGOV Bill Summary by Michael Smallberg.

FY20 Appropriations: House Democrats this week will finalize their plans to begin moving fiscal 2020 spending measures to the floor in June. The House Appropriations Financial Services and General Government Subcommittee is scheduled to mark up its fiscal 2020 appropriations bill today. That measure was released last night. The full House Appropriations Committee meets tomorrow to mark up the fiscal 2020 Transportation-HUD and Agriculture-FDA appropriations bills. And House appropriators plan to release the last of the fiscal 2020 bills this week when they drop the Homeland Security bill on Tuesday, ahead of a Wednesday subcommittee markup.

The chamber will begin moving the measures to the floor June 12, according to House Majority Leader Steny Hoyer (D-Md.).

Tax Extenders: Some House Ways and Means Committee Democrats are open to a slimmer, less expensive package of expired tax breaks — a strategy that could make the fractious process more palatable to detractors. That effort could have some appeal in the House, where extending temporary tax breaks typically has had less support than in the Senate. But it remains to be seen whether Ways and Means Chairman Richard Neal (D-Mass.) would be able to thin the extenders package. Read more from Kaustuv Basu and Robert Lee.

Carried Interest Tax: One of private-equity and hedge-fund managers’ most prized tax breaks is again in politicians’ crosshairs, but Democrats would need to sweep the 2020 election if they want to pull the trigger to end the option.

Trump said in May that he wanted to increase taxes on carried interest, a major form of compensation for hedge-fund and private-equity managers. Several leading Democratic presidential candidates also have said they want to end the break. Yet there are a couple of reasons the carried-interest tax break, despite bipartisan opposition, isn’t dead yet. Most Republicans, and even some Democrats, oppose killing a tax option that investment firms have successfully argued creates jobs. And eliminating the break wouldn’t actually raise all that much money. Read more from Joe Light.

Regulatory Efforts

Big Business Targets Fractured Regulations: An influential business lobbying group is seizing on the Trump administration’s de regulatory fervor to ask for more relief from what it says is a costly problem of multiple agencies overseeing food production, transportation and finance.

The Business Roundtable is asking Trump today for an executive order or presidential memorandum to reduce regulatory overlap, while at the same time acknowledging great strides to improve coordination among agencies. “From the point of view of the regulated community, there’s a lot of room for improvement,” Marcus Peacock, chief operating officer of the Business Roundtable, said in an interview. Read more from Cheryl Bolen.

DOJ Targets Nationwide Injunctions: The Trump administration is raising the stakes in a decades-long effort by the Justice Department to curb nationwide injunctions, which have halted signature presidential policies under both Republican and Democratic administrations. High ranking officials have been pushing the issue in speeches to the legal establishment, portraying the practice as a judicial power grab. Both Vice President Mike Pence and Attorney General William Barr launched public criticisms against the practice in May. Read more from Kimberly Strawbridge Robinson.

Politics & Elections

Biden’s Rivals Take Swings: The gloves are off in the Democratic presidential campaign, as Joe Biden’s main competitors shed the collegiality of the race’s early stages to try to knock the former vice president off his front-runner’s perch.

Biden was nowhere near San Francisco this weekend for the first major gathering of Democratic hopefuls. But his presence was felt in the Moscone Center as Sens. Bernie Sanders (I-Vt.) Elizabeth Warren (D-Mass.) and Indiana Mayor Pete Buttigieg took unmistakable jabs at his core pitch as a moderate who’ll revive governing by consensus-building.

Sanders, for example, told the California Democratic Party convention that there can be “no middle ground” when it comes to delivering on promises of universal health care, addressing climate change, bridging income inequality and assuring abortion rights. Warren took aim at what Biden’s critics say is his incremental approach to policy and a readiness to compromise. Read more from Sahil Kapur and Tyler Pager.

2020 Democrats Talk Impeachment: Many of the Democrats running for president are also turning impeachment of Trump into a campaign focal point, pressuring party leaders who are trying to throttle back expectations the Democratically controlled House will act quickly. The contenders and congressional Democrats face a growing clamor from the party’s activist base for impeachment proceedings to commence in Washington. The sentiment — and the divisions it’s causing — was evident as 14 of the 23 presidential hopefuls were addressing the California convention.

Among the contenders, home-state Sen. Kamala Harris (D-Calif.) drew the loudest applause during her speech on Saturday when she lit into the president. “He obstructed justice and hired an attorney general to clean up the crime scene,” Harris said. “We need to begin impeachment proceedings and we need a new commander in chief.” Read more from Sahil Kapur and Tyler Pager.

Hogan Won’t Challenge Trump: Maryland Gov. Larry Hogan (R) will not challenge Trump for the 2020 Republican presidential nomination, the Washington Post reported on Saturday. The second-term governor had considered a primary run as a traditional GOP alternative to the president. “I’m not going to be a candidate for president in 2020,” Hogan told the newspaper in an interview. Read more from Steven T. Dennis.

Regulators Target ‘Zombie’ Campaigns: Former Speaker Tom Foley has been out of office for a quarter of a century and dead for six years. Yet his campaign lives, with $36,000 squirreled away in an account intended for his re-election. Ex-Rep. Joseph Kennedy II (D-Mass.) left Capitol Hill in 1999. His old political committee still has more than $2.5 million. Ex-Rep. Michele Bachmann (R-Minn.) controls a $1.7 million of donor cash. Now federal regulators are cracking down on the practice of hoarding contributors’ money long after the candidates’ political careers are over. Kenneth P. Doyle has more.

Movers & Shakeups

Economic Adviser Hassett to Depart: Kevin Hassett, a fixture of conservative economic circles for two decades who vigorously defended Trump’s signature tax cuts, will soon be leaving his role as chairman of the White House Council of Economic Advisers. “Kevin Hassett, who has done such a great job for me and the Administration, will be leaving shortly,” Trump tweeted last night. “His very talented replacement will be named as soon as I get back to the U.S. I want to thank Kevin for all he has done — he is a true friend!”

Hassett, who directed economic policy studies at the American Enterprise Institute before joining the administration, regularly credited the overhaul of the tax code with boosting financial markets and wages during television appearances and media briefings. Read more from Justin Sink.

White House Lawyer to Depart: White House lawyer Emmet Flood, who oversaw the legal response to Special Counsel Robert Mueller’s investigation, will leave his position June 14, Trump said in a tweet this weekend. “Emmet is my friend, and I thank him for the GREAT JOB he has done.”

Canada Ambassador: The Trump administration is considering Republican donor Aldona Wos to be its next ambassador to Canada, according to two people familiar with the plans. Wos, a retired physician who served as U.S. ambassador to Estonia under George W. Bush, would succeed Kelly Craft, who has been nominated to be the envoy to the United Nations, said the people, speaking on condition of anonymity. No announcement would be made until after Craft is confirmed and in the new position, an official said.

Wos and her husband, Louis DeJoy, who both raise money for the GOP, are from North Carolina. Wos, born in Poland, served previously in the state government under Republican Governor Pat McCrory. Read more from Josh Wingrove and Jennifer Jacobs.

‘Trumponomics’ Economist Laffer to Get Medal of Freedom: Trump will award economist Arthur Laffer with the Presidential Medal of Freedom, bestowing the nation’s highest civilian honor on the conservative academic who has become synonymous with supply-side economics. Laffer, the 78-year-old who served as an aide to President Ronald Reagan, advised Trump during his presidential campaign and is the co-author of the book “Trumponomics: Inside the America First Plan to Revive Our Economy.” He is best known for his eponymous “curve,” which theorizes that taxation rates beyond a certain level can prove counterproductive by dis incentivizing work — an argument frequently cited by Republican lawmakers who seek to reduce tax rates. Read more from Justin Sink and Margaret Talev.

Middle East Peace Plan

Kushner Questions Palestinians: Trump’s son-in-law and senior adviser Jared Kushner said in an interview that the Palestinians aren’t yet able to govern themselves and declined to promise them an independent state in the White House’s long-awaited Mideast peace plan. “The hope is that they over time will become capable of governing,” Kushner said in an interview with Axios on HBO that aired yesterday.

Kushner is leading a White House effort to draft a new peace proposal for the Israelis and Palestinians, and Trump said yesterday he believed a deal could probably be reached. The effort faltered after Trump announced in 2017 he would move the U.S. embassy to Jerusalem. The Palestinians have said they will boycott an economic conference in Bahrain this month that Kushner arranged as a first step in the peace plan. Read more from Josh Wingrove and Kim Chipman.

Meanwhile, Secretary of State Michael Pompeo offered a pessimistic view of the Trump administration’s long-awaited Middle East peace plan, telling Jewish leaders the proposal might not “gain traction,” the Washington Post said yesterday, citing a recording of a recent closed-door meeting. “It may be rejected,” Pompeo is quoted as saying. “Could be in the end, folks will say, ‘It’s not particularly original, it doesn’t particularly work for me,’ that is, ‘it’s got two good things and nine bad things, I’m out.’”

“The big question is can we get enough space that we can have a real conversation about how to build this out,” he said, according to the Post. Read more from Steve Geimann.

Trump on Israel Elections: Trump complained about what he called “ridiculous” plans for new elections in Israel after Prime Minister Benjamin Netanyahu failed to form a governing coalition. Trump, speaking yesterday to reporters outside the White House, weighed in on the Israeli elections after he was asked about prospects for his administration’s long-awaited Middle East peace plan. “In the meantime, Israel’s all messed up with their election,” he said. “Bibi got elected, now all of the sudden they’re going to have to go through the process again, until September? That’s ridiculous. So we’re not happy about that.” Read more from Josh Wingrove.

What Else to Know Today

U.S. Ready to Talk to Iran Without Preconditions: Pompeo said the Trump administration would be ready to negotiate with Iran without preconditions, even as an American fighter bomber and aircraft carrier practiced strike operations in the Arabian Sea. Pompeo was responding to Iranian President Hassan Rouhani’s expression of willingness to negotiate with the U.S. as long as his country wasn’t bullied into doing so. But an Iranian military official warned yesterday that all U.S. military forces in the Gulf were within range of his country’s missiles, and Iran’s foreign minister said talks are “not very likely.”

A spokesman for Iran’s Foreign Ministry said Pompeo’s comments didn’t demonstrate a change in U.S. policy, according to the semi-official Mehr News agency. The U.S. approach towards the Islamic Republic was wrong and “needs to be corrected.” Read more from Arsalan Shahla and Zainab Fattah.

DOD Accuses China of ‘Predatory Economics’: A Pentagon report slammed China for “eroding the values and principles of the rules-based order” just as Acting Defense Secretary Patrick Shanahan was in Singapore attempting to downplay a spat between the world’s two largest economies. In the more than 50-page “Indo-Pacific Strategy Report,” released on Saturday, the U.S. criticized China’s actions in the region on several points, and affirmed the U.S. commitment to boost multilateral efforts with other Asian countries.

China, under Communist Party leadership, “seeks to reorder the region to its advantage by leveraging military modernization, influence operations, and predatory economics to coerce other nations,” according to the report, which included a message signed by Shanahan. Read more from Ros Krasny.

Shanahan Sees No Need to Probe USS John McCain Directive: The Pentagon doesn’t need to investigate a White House directive for the U.S. Navy to move the warship USS John S. McCain from view before Trump’s recent trip to Japan, Shanahan said yesterday. The White House military office requested that the Seventh Fleet keep the warship “hidden from view,” Shanahan told reporters en route to South Korea. But the directive wasn’t carried out, and “all ships remained in normal configuration during the visit,” he said. “No, I am not planning any IG investigation,” Shanahan said when asked if the inspector-general would investigate. No investigation was needed “because there was nothing really carried out,” he said. Read more from Glen Carey.

Trump Still Seeking Korea Talks: Trump will continue to seek talks with North Korean leader Kim Jong Un as the U.S. looks to defuse tensions following a failed summit in February, according to his administration’s top nuclear envoy. “The United States is convinced that through continued negotiations, we can continue to close the gaps that separate our two countries and make further progress on all the goals that we committed to in Singapore,” Stephen Biegun told the Shangri-La Dialogue, a major Asian security meeting in the ci ty-state, on Saturday. Read more from Iain Marlow and Sungwoo Park.

To contact the reporter on this story: Zachary Sherwood in Washington at zsherwood@bgov.com